Solving the housing crisis isn’t just about land or planning – it’s about power, literally

The UK’s housing crisis is well-documented: there aren’t enough homes in the cities where people want to live, pushing prices up. While headlines often focus on planning restrictions and rising material costs, an equally critical but less discussed factor is holding back progress: energy capacity. The country’s power grid is overwhelmed, increasingly blocking new developments – from large regeneration projects to smaller housing schemes.

Without sufficient power, Labour’s plans, including the New Towns Programme and its target of 370,000 new homes a year, are at risk before they even begin. This problem is exacerbated in growth regions like London and the wider Southwest, where the power grid was never designed to handle current demand. The electrification of heating systems, driven by decarbonisation efforts, electric vehicles, and the rise in renewable energy, has stretched the system to its limit. For housing developers, this creates a critical bottleneck. In some areas, new housing developments are waiting years for grid connections. As of March 2024, 12,600 homes in West London have secured electricity, but 3,900 are still waiting. Developers in the region have even been warned that new housing projects could be halted until 2035 due to lack of available grid connections.

To tackle these challenges, the rise of high-energy assets like data centres is worsening the situation. These facilities consume far more electricity than even the most energy-intensive housing developments. As data centres have become essential to the economy – supporting everything from smart homes and internet-connected devices to AI technologies – they introduce new demands on the power grid, creating a competitive market for energy. This competitive landscape affects not only housing developers but also local economies, as the lack of power connections can hinder retail and hospitality sectors. Restricted power supply significantly impacts their ability to operate effectively, potentially threatening the vitality of high streets and complicating efforts to revive community spaces.

Labour’s green revolution at risk

Labour’s focus on both housing delivery and a green revolution is now at a crossroads. The recent closure of the UK’s last coal-fired power plant marks a significant step toward cleaner energy, but it raises questions about how to meet energy demands during peak times. As reliance on renewable sources grows, energy supply becomes less predictable, particularly during high-demand periods.

To fill this gap, a diversified energy mix is essential. One potential solution is nuclear energy – a reliable, low-carbon power source that could ease the pressure on the grid while complementing renewables. Labour’s proposal for GB Energy, aimed at accelerating the development of renewable and nuclear power, offers hope. If implemented quickly, it could help stabilise the grid and unlock the housing development the UK desperately needs.

What needs to change then?

Greater investment in grid infrastructure is crucial. The government, both national and local, must prioritise upgrading the grid to meet current and future demands. This includes accelerating National Grid’s plans to modernise the system and ensuring that housing developments are given equal priority when it comes to energy allocation.

We need better coordination between local authorities, developers, and energy providers. Too often, planners treat energy provision as an afterthought, leading to costly delays. By fostering early and ongoing collaboration among these key players, we can ensure that energy capacity is prioritised from the start. To support this, the Department for Energy Security and Net Zero has tasked the new National Energy System Operator with creating the first-ever “strategic spatial plan for energy” that balances grid capacity needs across housing, transport, and environmental demands nationwide.

The private sector has a role to play. Innovative solutions, such as microgrids, battery storage, and localised energy generation, can help relieve pressure on the main grid and offer more sustainable, long-term solutions for housing developments. Microgrids and local energy generation are already being piloted in smaller developments across the UK, but with the right incentives and regulatory support, these solutions could scale up significantly. Additionally, using excess heat from data centres to warm nearby homes could help reduce electricity demand.

The UK’s need for new homes is undisputed, but without adequate energy capacity, even the best housing policies will fail. Urgent investment in grid infrastructure, alongside initiatives like nuclear energy and GB Energy, is essential to unlocking the housing delivery the country desperately needs. Without addressing these energy challenges, even the most ambitious housing plans will buckle under the strain of an overwhelmed power grid. In short, solving the housing crisis isn’t just about land or planning – it’s about power, literally.